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France NFT VAT electronic service

Tax office issues VAT guidance on Non-fungible tokens

The French tax authorities have published guidance on the VAT obligations for Non-Fungible Tokens (NFT’s). It reflects the common practise of treating it as an electronic service. This includes supply of intangible goods, such as the creation and sale of collectible digital cards and digital graphic works by artists, are also subject to VAT.

NFT’s are unique computer files, created and stored in a digital transaction tracking register called “blockchain” (“blockchain”). They are commonly used as a certificate of ownership of a tangible or intangible good, a transaction involving the transfer of a NFT does not relate to the token itself, but to the good or service to which it relates.These may be really, physical goods or traditional services or digital / virtual.

NFT’s not exempt financial service

In addition, NFT’s do not correspond to the three main categories of crypto-assets that are payment tokens, utility or use tokens and investment tokens, because of their indivisibility and non-fungibility. Thus, transactions involving JNF do not fall under banking or financial operations exempt from VAT on the basis of 1° of Article 261 C of the General Tax Code (CGI).

What are Non-Fungible Tokens?

There are no EU legal definitions of NFT’s. They are digital tokens of ownership or rights to access for a digital asset. In this sense, they are unique – hence non-fungible or interchangeable for another token. This could include: digital version of artwork; access to live events.

NFT’s are held on distributed ledgers, internet-connected nodes (e.g. connected computers). They are similar to cryptocurrencies, which are exchangeable (‘fungible’).

NFT’s constitute two parts:

  1. Identification code related to the token
  2. Metadata relating to the digital or physical asset – a name, description and, if appropriate, URL

They are created, or ‘minted’, which typically attracts a fee (‘gas fee’) for computation and storage. They are then typically held on-chain, on a digital ledger.  A popular, cheaper version is off-chain.

Countries such as Spainand Belgium have already classified as a VAT’able electronic service – whereas cryptocurrencies are exempt. Norway has gone the same way.  New Zealand GST on NFT’s has also been confirmed. In the US, Washington state levied sales taxes on NFT‘s from 1 July 2022.



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